Mr.
Bellingham: My hon. Friend’s example illustrates
the point. The trade unions now rightly offer their members a wide
range of services, and there are many examples of trade unions taking
up claims on behalf of individuals. One could argue that the trade
unions come within a totally separate legislative framework, and I am
prepared to debate that with the Minister because I should like to hear
her view. My hon. Friend the Member for Hertsmere has mentioned the
miners’ compensation saga, and I understand that a very large
number of claims were entered by the trade unions—two unions in
particular—which were then passed on to a number of law firms.
As we know, the costs incurred by some of those law firms were huge,
but the law firms were dealing with applicants, plaintiffs and
defendants outwith the scope of the 2006 Act, whereas trade unions
should be within that scope.
Mr.
Douglas Carswell (Harwich) (Con): Should there not be
something on how trade unions use public money under the so-called
modernisation fund that derives from the Employment Act 2005? Should
they not be held to account for their use of public
money?
Mr.
Bellingham: As my hon. Friend has
pointed out, the Employment Act 2005 set up the modernisation fund,
which gives the trade unions quite a lot of extra public money to be
able to communicate better with their members. If they use the money
from a modernisation fund to communicate with their members and explain
to them the possibility of making certain types of claim and of
bringing personal injury issues into the public
domain, and also to explain all the other claims that may flow from
certain injuries or health incidents at work, public money is being
used to help elaborate such claims. I should have thought that that was
another reason why the trade unions could be brought within the scope
of the regulations. I hope that the Minister will put our minds at rest
and say that we are not exempting a particular organisation for any
reason other than that there is a separate legislative framework
controlling trade unions. Many different pieces of legislation, which
we cannot go into this morning, control what trade unions can and
cannot
do. Mr.
Bob Laxton (Derby, North) (Lab): Will the hon. Gentleman
accept that there is a wealth of difference between what he is talking
about and ambulance chasers stopping people in the street? I am sure
that in the hon. Gentleman’s constituency, just as in mine,
people are stopped in the street by persons with clipboards asking,
“Have you fallen over? Have you had an accident? Do you want to
make a claim?” There is a wealth of difference between that and
the way in which trade unions operate. The unions have an occupational
interest and know the industry with which they are involved; they are
often approached by individual members regarding some occupational
disease, for example, and know full well about the background. That is
different from the cold calling and ambulance chasing that goes off
throughout the
land.
Mr.
Bellingham: The hon. Member for Derby, North has put a
plausible, fair
point.
Mr.
Bellingham: Of course. However, my point is that two
factors need looking at. First, the trade unions now have a substantial
amount of extra public money for investigating claims. Secondly, law
firms are outwith the scope of the
regulations.
Simon
Hughes: On a point of order, Mr. Chairman. I
understand that a draft order dealing with that is coming soon. The
trade union matter is not in any of the orders that we are discussing
and we could have a long debate about it, because it is controversial.
Perhaps you could make it clear, Mr. Jones, that that is not
the subject of any of the
orders.
The
Chairman: I was about to make that clear. However, since
we are dealing with claims generally, I think that I shall allow a
little bit more
discussion.
Mr.
Bellingham: I am grateful, Mr. Jones. I shall
draw my remarks to a
close.
Mr.
Clappison: I am surprised that the Liberal Democrats are
taking such a cavalier approach towards the protection of consumers,
but there we are. Does my hon. Friend agree that the important thing is
protecting the person who wants to make a claim? There may be
differences in the standards used by the people making the claim on
their behalf, but surely the regulations should go as far as possible
to protect consumers. It is surprising that the Liberal Democrats do
not share that wish.
Mr.
Bellingham: The Minister has said on a number of occasions
that the regulations are about consumers and individuals who are
concerned about their health, a personal injury, an accident at work or
whatever, and who are at their most vulnerable. If someone is about to
pursue a claim of any kind, they will be at their most vulnerable and
will need the most
protection. We argued
about the 2006 Act when it was before Parliament, but now it has been
enacted, it is important that the regulations work properly and fairly
and that consumers have confidence in them. I hope that the Minister
will answer my specific questions, and we shall do our level best to
make the legislation work
properly. 10.53
am
Simon
Hughes: I, too, am happy to serve under your chairmanship,
Mr.
Jones. First, I shall
deal with the point on which I intervened. I am slightly rising to the
bait of the hon. Member for Hertsmere, but I am clear that there is a
proper discussion to be had—we have had it before and we will
have it again—about who should be exempted from the 2006 Act.
There will be debate, and there may even be votes, about whether trade
unions should or should not be exempted. I was not shying away from
that discussion; I was just trying to assist the Committee to have a
shorter sitting than it might have had if there were a great debate
about the trade
unions. May I ask the
Minister to say, given that the draft compensation exemption order has
been prepared, when she intends it to be discussed in the House?
Obviously, the relevant part of the 2006 Act cannot come into force and
an order cannot be introduced before the draft orders have been debated
and approved in both Houses of
Parliament. Will the
Minister clarify where we are on the implementation of the Act? I
welcome the fact that we have moved quickly. My starting point on these
issues is the same as that of the hon. Member for North-West
Norfolk—one should regulate as little as possible and Britain
has far too much regulation. We need as little regulation as possible.
The 2006 Act was effectively an umbrella Act, meaning that the
substantive legislation is to come by way of secondary legislation, so
the die is cast as a result of what we did earlier in the year and in
the last Session. I congratulate through the Minister those who worked
to produce the regulations quickly, because we want to pass the
legislation quickly. People said that there were lots of abuses, and it
would have been nonsense had we waited a year for the regulations to be
drafted and brought before Parliament for
approval. On
implementation, section 3 of the 2006 Act, which deals with
mesothelioma, came into force immediately, and we debated that measure,
which we wanted to happen. I am not clear whether the commencement date
orders and ministerial decisions have been made about the rest of the
Act, and I would be grateful if the Minister could tell me whether they
have. Now that we have set off down this road, we need the system to
come into operation as soon as
possible. As I
understand it, the legislation, apart fromsection 3 and the
related sections on mesothelioma, applies to England and Wales only.
The parts of the
2006 Act dealing with miners’ injuries and asbestos-related
disease apply to the whole of the United Kingdom, for obvious reasons.
It is possible that when we implement the regulations for England and
Wales, companies based in Scotland or Northern Ireland might offer
their services to people in England and Wales—by definition, one
can trade across national boundaries in the United Kingdom. I would be
grateful if the Minister could tell us what the impact of the
regulations will be across the borders in Scotland and Northern Ireland
and whether those countries have considered, or are considering, how
they might deal with this issue. In Scotland, the matter is much less
serious because of the law there—again we debated that in
Committee when we considered the Act—but I am not sure about the
position in Northern Ireland and would be grateful for an
indication. I am
conscious that I have touched on some points that are only indirectly
linked to the matter before us. However, I would like to make a few
more points. I gather that the trade union code of practice, which
isto be covered by regulations, is in draft form. If
so,will the Minister show interested colleagues in the
Committee the latest draft so that we can save time by reducing the
number of questions when we return to look at
it? Part 3 of the
regulations states that it is a
“criterion for the grant of an
application for authorisation
that— (a) in
the case of ... a body corporate, each of the applicant’s
directors; (b) in the
case of ... a partnership ... each of its members;
and (c) each other
person who appears to the Regulator to be able to exert significant
influence on the applicant’s policy or
management; is suitable to be
associated with the provision of regulated claims management services
of the kind to which the applications
relates.” That means that
when the application is made, the suitability of the individual is
checked, which is a perfectly proper process.
A valid question has been
raised about whether the definition of “associate” is
appropriate or too wide. I do not have a hard view, but clearly we do
not want to catch most people, but fail to catch others. I would be
grateful if the Minister could say whether that is a considered
definition, because I am told that it is much wider than, for example,
the legal definition of a “shadow director”. Other
definitions in companies legislation are slightly tighter as
well. This is a bit
like the debate on terrorism when we discussed whether there was a
danger that a person who turned up at a meeting at which somebody was
talking about or inciting people to commit terrorist acts might be
caught simply by being there. A valid point has been made that somebody
who is “suitable to be
associated with a provision
of...services” is a
very wide definition. I wonder whether it is too wide, and I should be
grateful for the Minister’s
response. I am
concerned that two conditions in the draft have been unreasonably
removed from the final regulations. The Minister obviously cannot amend
regulations as they appear before us, but I wonder whether we could
look again at the authorisation conditions relating to those who carry
out this sort of business. The proposal
that people who want to do so should supply audited accounts seems to
have been lost. One way of showing that a business is valid and that it
has behaved properly is for it to register with and submit audited
accounts to Companies House. I wonder why that requirement has been
dropped. The second
condition is even more important. The requirement in the draft to have
a complaints handling procedure has been dropped, but that is
imperative as a prerequisite for authorisation. There is a code of
practice on complaints handling and related rules, and if consumers
have a complaint about an approved organisation that has passed that
test, they should know that there is a publicly available complaints
handling process. On
part 6, unless I have missed something, I have not seen a draft code of
practice. If such a document exists, will the Minister please tell us,
and can we see it? The principles set out in a submission from the
British Insurance Brokers Association, which members of the Committee,
including the Minister and her officials, will have received, set out
the following principles—principle 1, integrity; principle 5,
market conduct; and principle 6, customers’ interest. Those
principles might be used as a model for a code of
practice. Part 10,
which concerns me most, states that the regulator can cancel, suspend
or vary an authorised person’s authorisation to the extent
necessary to protect the public, but that such a cancellation,
suspension or variation does not take effect until the end of the
period within which the matter may be referred to the tribunal. I make
the obvious point that if a rogue business is ripping off the public,
the danger of saying that it cannot be suspended until it has been to
the tribunal means that it can go on ripping off the public.
There is a fine balance to
strike between the freedom to trade on one hand and consumer protection
on the other, but if the regulator and his team think that someone is
behaving inappropriately, the best practice is to suspend that person
until the tribunal has dealt with them, as happens when someone is in
employment, and to have a limit on the time between the two so that
there is no long period of uncertainty. Is there some way in which we
can consider an earlier suspension or a guaranteed maximum
time—a short period such as, for example, a month—so that
if there is a complaint, there is no risk of consumers losing out in
the interim? On the
Compensation (Specification of Benefits) Order 2006, I asked whether
other benefits can be included, and I understood from the
Minister’s answer that although the order currently includes
only one type of benefit, the Minister has not ruled out claims farming
for other benefits included elsewhere. If this proposal is agreed, will
those who hold themselves out as helping people with their criminal
injuries claims be covered? That was not clear to
me. The National
Accident Helpline, which we all know and love from debates in Committee
and in the Chamber, has asked two good questions. First, will the
Minister guarantee that garages and body shops that
pass on referrals for a fee, reward or gain will be covered, and if not,
why not? The second question relates to regulation 12(5)(c), which is
concerned with tied agents and people who act as single business people
by performing the work and then feeding it back to the
company: “Can
the Minister explain why a requirement for individuals to seek
authorisation is
impractical?” I
understand that the regulations say that if I am an authorised business
under the 2006 Act, and if I receive business from an individual who
knocks on doorsand gets business for me, I am responsible for
that individual—but will that work? The concern is that it is
much more difficult to police such individuals if they need not be
approved. Should such individuals be approved? I do not have a hard and
fast opinion, butit is a valid question. It is pointless
having good regulations under a good Act and then discovering that a
few people can escape the
system. 11.6
am
Bridget
Prentice: I shall try to answer all the questions that
have been asked in as much detail as possible, and if I miss anything I
shall write to the Committee in more
detail. The hon.
Member for North-West Norfolk has mentioned the status of the
regulator. As he pointed out, under the current system the interim
regulator will be the Secretary of State. We have appointed Mark Boleat
as head of regulation, and Staffordshire county council’s
trading standards unit will run the monitoring and compliance unit.
Regulation by the Secretary of State is an interim measure, because the
Legal Services Bill, which I believe will receive its Second Reading in
the other place tomorrow, will establish a new framework for legal
services regulation and set up the legal services board and the office
for legal complaints. We intend that claims management regulation will
then become an integrated part of that new structure. I hope that that
answers the hon. Gentleman’s
question. The hon.
Gentleman also mentioned the comments made by the Better Regulation
Task Force. It is true that the industry was given the opportunity to
self-regulate, but that attempt failed. One reason for the failure was
insufficient buy-in from the industry itself, and we felt that we had
to act reasonably quickly and establish a statutory structure. The
Better Regulation Task Force recommended that that should happen by
December last year in the absence of sufficient
progress. The hon.
Gentleman also asked when and where the consultation took place. I
cannot give him the cost now, but I will obtain the figures. There were
four consultation meetings in Newcastle, Manchester, Bristol and
London. I am sorry to say that there were no meetings in Norfolk or
Suffolk, although the reason why—the consultation took place in
the summer—is beyond me. We have just published the summary of
the responses, and 74 representatives from 57 companies attended the
meetings. There have also been regular meetings of the regulatory
consultative group, which has representatives from the industry, from
solicitors, from the insurance industry and from consumer
groups.
On fees and their effect on the
industry, it is indeed our intention that claims management regulation
should be self-funded. However, in the short term—with
uncertainty on the numbers who will come forward for
authorisation—we recognise that we must provide start-up
funding, and we intend to do so. It is imperative that funding
arrangements are in place to enable the 2006 Act to be implemented in a
timely fashion, so that consumers can be protected, and we intend fees
to be reasonable and proportionate. The regulatory impact assessment
examined the impact on small business, and the Federation of Small
Businesses has been specifically consulted and supports regulation of
the sector. We have published draft fee rules setting out the charging
regime, and I shall ensure that members of the Committee see a copy of
it. The hon. Gentleman
asked an important question about search warrants. We must always
consider seriously whether to extend search powers, but the problem is
that many claims management firms are sole traders, often working from
home. We therefore felt it necessary to allow search warrants in
limited circumstances to ensure that the regulations can effectively be
enforced. The powers are modelled on those in the Police and Criminal
Evidence Act 1984, and they are general warrant powers with the same
time limits as under that
Act. We had a short
play-within-a-play debate on the role of trade unions. As the hon.
Member for North Southwark and Bermondsey pointed out, we will have the
opportunity to deal with the matter in some detail soon, so I do not
want to get too involved in it now. However, I say to the hon. Member
for North-West Norfolk that trade unions are within the scope of the
regulations, but they will have some exemptions. We will go into that
in more detail on another
occasion. The
hon. Member for North Southwark and Bermondsey asked a number of
questions and kindly asked me to pass on my congratulations on the
speed with which the regulations were put together. I fully endorse
those comments, and I will ensure that everyone concerned receives
those congratulations. He asked me whether other sectors are being
considered. The answer is that they are, insofar as if there seems to
be a problem in another sector, it can be brought within the scope of
the 1984 Act. I assure the hon. Gentleman that claims under the
criminal injuries compensation scheme are brought within the scope of
the 2006 Act by the scope order. Other matters, such as property damage
claims, were considered, but we decided that there was not enough
evidence to suggest that there was a major problem. However, we will
keep that under
review. The hon.
Gentleman also asked about the effect of the regulations in Scotland
and Northern Ireland. We had good consultation and discussions with
Scotland and Northern Ireland, particularly with the Scottish
Executive. There are two reasons for the extent of the regulations:
first, the law is slightly different in Scotland; and secondly, the
Scottish Executive said that there was little evidence of any problem
in Scotland and that they did not feel that there was a need to
introduce statutory regulations. The same is true in Northern
Ireland—somebody might want to research why that is the
case—but should problems arise, Scotland and Northern Ireland
will have the power to introduce their own legislation.
I want to
make it clear that if someone living in England were to use a claims
management firm based in Scotland, then because the consumer concerned
was in England, they would be able to use the powers in question to
bring their case in England. I hope that that answers the hon.
Gentleman’s
question.
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